Truck stop firms, truckers seek court approval of deal

Nov. 6, 2013

Written by

Walter F. Roche Jr.

The Tennessean

Jimmy Haslam / David Richard / Associated Press

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The estimated value of a proposed settlement of rebate fraud claims against Pilot Flying J has jumped from $40 million to $72 million, according to lawyers for the truck stop firms and truckers who are seeking court approval of the deal.

In a more than 400-page filing in U.S. District Court in Little Rock, Ark., attorneys for Pilot and the trucking firms supporting the deal argued that the proposal was an “extraordinarily good settlement” and it was likely that the victims “would never receive any greater benefit.”

The proposal is set for a Nov. 25 hearing before U.S. District Judge James Moody, who already has given preliminary approval to the package.

The settlement, which would reimburse truckers with 6 percent interest for the millions in promised rebates that were never paid, stems from an April 15 FBI and IRS raid on Pilot’s Knoxville headquarters. After the raid, a 120-page affidavit from an FBI agent was filed in federal court detailing a scheme to systematically deprive truckers of promised diesel fuel rebates.

Seven former Pilot sales officials have already entered guilty pleas to mail and wire fraud charges. Pilot CEO James A. Haslam, a named defendant in the suit, has denied any knowledge of the scheme.

Opponents of the deal have argued that the settlement is inadequate because it includes no provisions for losses suffered by truckers due to the rebate reductions.

They also challenged the legitimacy of the suit, which was filed by National Trucking Financial Reclamation Services Inc., a company formed after the FBI raid by the head of an Arkansas trucking association with ties to Pilot.

Many have opted out

The motion filed this week in Little Rock states that truckers will “receive back every dime that they were shortchanged.”

In addition to the rebate reimbursement of $55 million plus $4.1 million in interest, the proposal provides that attorneys for the truckers who have agreed to the deal would collect up to $14 million in fees.

Though the motion states that no class members have filed a formal objection to the proposed settlement more than 150 truckers have opted out of the settlement and indicated they will pursue claims individually. Pilot attorney Aubrey Harwell said that number includes multiple filings by commonly owned companies and the actual number of stand-alone companies opting out was about 55. Pilot attorneys have stated there are some 6,000 members of the class, although only about 400 were in the specific rebate program in which payments were secretly reduced.

“The proposed settlement is excellent and weighs in favor of approval,” the motion states.

In a motion critical of the settlement, attorneys for Wright Transportation, an Alabama trucking firm, have charged that the proposal gives victims only the amount Haslam had already publicly promised before the suit was even filed.